Continuing the regulatory build-out of current expected credit loss (CECL) accounting, the banking agencies have proposed an updated version of current loan-loss reserving guidance adding numerous additional governance duties for boards and senior management.  Given the major strategic, operational, accounting, and internal-audit changes accompanying CECL implementation, the guidance makes it clear that boards and senior management will need to devote considerable attention to this transition in anticipation of stringent supervisory review even though the agencies have yet to finalize separate supervisory standards.  Nothing in this guidance affects the capital implications of CECL nor changes the transition periods for capital purposes finalized by the banking agencies late last year.

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